Lakeland Bancorp Second Quarter Results Driven by Strong Loan Growth

OAK RIDGE, N.J., July 22, 2015 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ:LBAI) (the "Company") reported the following results for the second quarter of 2015:

Net Income in the second quarter of 2015 was $7.9 million, or $0.21 per diluted share, compared to $7.8 million, or $0.20 per diluted share, for the same period in 2014. For the second quarter of 2015, Annualized Return on Average Assets was 0.88%, Annualized Return on Average Common Equity was 8.08%, and Annualized Return on Average Tangible Common Equity was 11.33%.

Net Income for the first six months of 2015 was $16.2 million, or $0.42 per diluted share, compared to $14.9 million, or $0.39 per diluted share, for the same period in 2014. The Annualized Return on Average Assets for the six months ended June 30, 2015 was 0.92%, the Annualized Return on Average Common Equity was 8.44%, and the Annualized Return on Average Tangible Common Equity was 11.87%.

The Company reported strong loan growth in the second quarter of 2015. Total loans increased by $65.0 million, or 2.4%, to $2.76 billion during the quarter. This overall increase was primarily in commercial loans, which increased by $77.6 million, or 4.1%. For the first six months of 2015, total loans increased by $101.1 million, or 3.8%, with a $125.9 million, or 6.9%, increase in commercial loans.

During the second quarter, the Company opened its second new Loan Production Office ("LPO") in as many quarters. This LPO serves the greater Hudson Valley, NY area and represents a new market for the Company. As previously announced, the Company also consolidated three branch locations in the quarter.

Net Interest Margin ("NIM") was 3.46% for the second quarter of 2015, compared to 3.56% for the first quarter of 2015 and 3.69% for the second quarter of 2014.

Total deposits have increased $52.1 million to $2.84 billion since December 31, 2014. Most notably, noninterest bearing deposits increased $68.2 million, or 10.6%, in 2015.

On July 21, 2015, the Company declared a quarterly cash dividend of $0.085 per common share, payable on August 14, 2015 to holders of record as of the close of business on August 4, 2015.

Thomas J. Shara, Lakeland Bancorp's President and CEO said, "The second quarter was highlighted by the opening of our Loan Production Office in the Hudson Valley region of New York, continued strong growth of commercial loans as a result of our highly focused lending strategy and sustained growth in noninterest bearing deposits."

Earnings

Net Interest Income

Net interest income for the second quarter of 2015 was $28.7 million, as compared to $28.4 million for the same period in 2014. The ten basis point decline in NIM from first quarter 2015 to second quarter 2015 was primarily due to the growth in new commercial loans originated and the refinancing of existing loans, both at lower rates, as well as a decline in yields from lower net interest recoveries. The annualized yield on interest earning assets for the second quarter of 2015 was 3.78%, as compared to 3.86% reported in the first quarter of 2015. The annualized cost of interest bearing liabilities for the second quarter of 2015 was 0.42%, as compared to 0.40% in the first quarter of 2015.

Net interest income for the first six months of 2015 was $57.2 million, as compared to $56.3 million reported for the first six months of 2014. Annualized NIM for the first six months of 2015 was 3.51%, compared to 3.71% for the same period in 2014. The Company's annualized yield on earning assets decreased from 3.98% for the first six months of 2014 to 3.82% for the same period in 2015. The Company's cost of interest bearing liabilities increased from 0.36% for the first six months of 2014 to 0.41% for the first six months of 2015.

Noninterest Income

Noninterest income totaled $5.0 million for the second quarter of 2015, as compared to $4.4 million for the same period last year. This $0.6 million, or 13.4%, increase is primarily due to the $0.3 million increase in gain on sale of loans and $0.3 million in swap income.

Noninterest income totaled $9.7 million for the first six months of 2015, which was $1.3 million, or 14.8%, higher than the same period in 2014. Included in noninterest income was a $0.5 million increase in gain on sale of loans, $0.3 million in swap income, and $0.3 million in death benefits received on a Bank Owned Life Insurance Policy.

Noninterest Expense

Noninterest expense for the second quarter of 2015 was $21.2 million, as compared to $19.5 million for the same period in 2014. Salary and benefit expense at $12.1 million increased by $0.9 million, primarily due to $0.3 million in costs associated with the addition of the new LPOs, $0.2 million in increased medical benefit costs, and year-over-year incremental salary and benefit increases. Net occupancy expense at $2.3 million increased $0.2 million and included a $0.2 million write down to fair market value for one of the closed branches. Other expenses at $3.4 million increased $0.5 million, primarily due to $0.3 million in additional loan related expenses.

For the first six months of 2015, noninterest expenses were $41.2 million, as compared to $39.3 million for the same period in 2014. Salary and benefit expense at $23.9 million increased by $1.9 million, primarily due to $0.4 million in new costs associated with the addition of the new LPOs in 2015, $0.3 million due to the timing of the issuance of restricted stock compensation, $0.3 million in increased medical benefit costs, and year-over-year incremental salary and benefit increases. The $0.2 million increase in net occupancy expense was due to a $0.2 million write down to the fair market value for one of the closed branches.

Financial Condition

At June 30, 2015, total assets were $3.70 billion, an increase of $160.8 million, or 4.5%, from December 31, 2014. Total loans were $2.76 billion, an increase of $101.1 million, or 3.8%, from December 31, 2014. Total deposits were $2.84 billion, an increase of $52.1 million from December 31, 2014. Noninterest bearing deposits at $714.2 million have increased by $68.2 million, or 10.6%, in 2015. Interest bearing deposits at $2.13 billion have decreased this year by $16.0 million, primarily due to a $68.0 million decrease in interest bearing public funds. This decrease was partially offset by a $34.4 million increase in money market demand accounts and a $26.5 million increase in CDs issued.

Asset Quality

At June 30, 2015, non-performing assets totaled $20.1 million (0.54% of total assets), a decrease of $1.6 million, or 7.5%, when compared to $21.7 million (0.61% of total assets) at December 31, 2014. Non-performing loans to total loans at 0.69% decreased nine basis points from December 31, 2014. The Allowance for Loan and Lease Losses totaled $30.2 million at June 30, 2015 and represented 1.09% of total loans, compared to $30.7 million at December 31, 2014, which represented 1.16% of total loans. For the first six months of 2015, the Company had net charge-offs of $2.1 million (0.16% of average loans), as compared to $3.0 million (0.24% of average loans) for the same period in 2014. The provision for loan and lease losses for the first six months of 2015 was $1.6 million, compared to $3.1 million for the same period in 2014.

Capital

At June 30, 2015, stockholders' equity was $390.9 million, while book value per common share was $10.31. Tangible book value per common share was $7.36, an increase of 4.2% from December 31, 2014. As of June 30, 2015, the Company's leverage ratio was 9.12%. Tier I and total risk based capital ratios were 11.05% and 12.15%, respectively. The common equity tier 1 capital ratio was 9.66%. The tangible common equity ratio was 7.78%. The regulatory capital ratios exceed those necessary to be considered a well-capitalized institution under Federal guidelines.

Forward-Looking Statements

The information disclosed in this document includes various forward-looking statements (with respect to corporate objectives, trends, and other financial and business matters) that are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "anticipates", "projects", "intends", "estimates", "expects", "believes", "plans", "may", "will", "should", "could", and other similar expressions are intended to identify such forward-looking statements. Lakeland cautions that these forward-looking statements are necessarily speculative and speak only as of the date made, and are subject to numerous assumptions, risks and uncertainties, all of which may change over time. Actual results could differ materially from such forward-looking statements. The following factors, among others, could cause actual results to differ materially and adversely from such forward-looking statements: changes in the financial services industry and the U.S. and global capital markets, changes in economic conditions nationally, regionally and in the Company's markets, the nature and timing of actions of the Federal Reserve Board and other regulators, the nature and timing of legislation affecting the financial services industry, government intervention in the U.S. financial system, changes in levels of market interest rates, pricing pressures on loan and deposit products, credit risks of the Company's lending and leasing activities, customers' acceptance of the Company's products and services, and competition. Any statements made by Lakeland that are not historical facts should be considered to be forward-looking statements. Lakeland is not obligated to update and does not undertake to update any of its forward-looking statements made herein.

EXPLANATION OF NON-GAAP FINANCIAL MEASURES

Reported amounts are presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Company's management believes that the supplemental non-GAAP information, which consists of measurements and ratios based on tangible equity and tangible assets, is utilized by regulators and market analysts to evaluate a company's financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies.

The Company also uses an efficiency ratio that is a non-GAAP financial measure. The ratio that the Company uses excludes amortization of core deposit intangibles, expenses on other real estate owned and other repossessed assets, provision for unfunded lending commitments and, where applicable, long-term debt prepayment fees and merger related expenses. Income for the non-GAAP ratio is increased by the favorable effect of tax-exempt income and excludes securities gains and losses and gain on debt extinguishment, which can vary from period to period. The Company uses this ratio because it believes the ratio provides a better comparison of period to period operating performance.

About Lakeland Bank

Lakeland Bancorp, the holding company for Lakeland Bank, has $3.7 billion in total assets with 48 New Jersey branch offices in Bergen, Essex, Morris, Passaic, Somerset, Sussex, Union and Warren counties, five New Jersey regional commercial lending centers in Bernardsville, Montville, Newton, Teaneck and Wyckoff and two commercial loan production offices serving Middlesex and Monmouth counties in New Jersey and the Hudson Valley region of New York. Lakeland Bank offers an extensive array of consumer and commercial products and services, including online and mobile banking, localized commercial lending teams, and 24-hour or less turnaround time on consumer loan applications. For more information about the full line of products and services, visit LakelandBank.com.

Lakeland Bancorp, Inc.

Financial Highlights

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in thousands, except per share amounts)

2015

2014

2015

2014

INCOME STATEMENT

Net Interest Income

$ 28,669

$ 28,419

$ 57,187

$ 56,264

Provision for Loan and Lease Losses

(740)

(1,593)

(1,610)

(3,082)

Other Noninterest Income

4,494

4,219

8,967

8,209

Gain on Sale of Loans

464

152

729

235

Noninterest Expense

(21,195)

(19,530)

(41,237)

(39,272)

Pretax Income

11,692

11,667

24,036

22,354

Tax Expense

(3,830)

(3,886)

(7,844)

(7,410)

Net Income

$ 7,862

$ 7,781

$ 16,192

$ 14,944

Basic Earnings per Common Share

$ 0.21

$ 0.20

$ 0.42

$ 0.39

Diluted Earnings per Common Share

$ 0.21

$ 0.20

$ 0.42

$ 0.39

Dividends per Common Share

$ 0.085

$ 0.071

$ 0.160

$ 0.142

Weighted Average Shares - Basic

37,854

37,740

37,827

37,711

Weighted Average Shares - Diluted

37,988

37,850

37,961

37,828

SELECTED OPERATING RATIOS

Annualized Return on Average Assets

0.88%

0.93%

0.92%

0.90%

Annualized Return on Average Common Equity

8.08%

8.58%

8.44%

8.36%

Annualized Return on Average Tangible Common Equity (1)

11.33%

12.41%

11.87%

12.15%

Annualized Return on Interest Earning Assets

3.78%

3.97%

3.82%

3.98%

Annualized Cost of Interest Bearing Liabilities

0.42%

0.36%

0.41%

0.36%

Annualized Net Interest Spread

3.36%

3.60%

3.41%

3.62%

Annualized Net Interest Margin

3.46%

3.69%

3.51%

3.71%

Efficiency Ratio (1)

62.09%

58.73%

60.64%

59.80%

Stockholders' Equity to Total Assets

10.57%

10.57%

Book Value per Common Share

$ 10.31

$ 9.70

Tangible Book Value per Common Share (1)

$ 7.36

$ 6.74

Tangible Common Equity to Tangible Assets (1)

7.78%

7.59%

ASSET QUALITY RATIOS

6/30/2015

6/30/2014

Ratio of Allowance for Loan and Lease Losses to Total Loans

1.09%

1.14%

Non-accruing Loans to Total Loans

0.69%

0.74%

Non-performing Assets to Total Assets

0.54%

0.58%

Annualized Net Charge-Offs to Average Loans

0.16%

0.24%

SELECTED BALANCE SHEET DATA AT PERIOD-END

6/30/2015

6/30/2014

Loans and Leases

$ 2,756,694

$ 2,610,198

Allowance for Loan and Lease Losses

(30,174)

(29,866)

Investment Securities

597,598

530,934

Total Assets

3,699,127

3,479,548

Total Deposits

2,842,953

2,726,850

Short-Term Borrowings

146,249

156,511

Other Borrowings

303,966

215,238

Stockholders' Equity

390,860

367,833

SELECTED AVERAGE BALANCE SHEET DATA

For the Three Months Ended

For the Six Months Ended

6/30/2015

6/30/2014

6/30/2015

6/30/2014

Loans and Leases, net

$ 2,720,801

$ 2,552,010

$ 2,690,823

$ 2,519,679

Investment Securities

600,547

537,974

591,778

539,837

Interest Earning Assets

3,345,380

3,114,539

3,308,450

3,088,193

Total Assets

3,600,416

3,360,289

3,563,860

3,336,630

Noninterest Bearing Demand Deposits

688,854

640,080

674,780

629,570

Savings Deposits

402,142

387,179

398,667

386,099

Interest Bearing Transaction Accounts

1,480,866

1,433,382

1,488,028

1,437,055

Time Deposits

295,996

284,475

288,459

288,826

Total Deposits

2,867,858

2,745,116

2,849,934

2,741,550

Short-Term Borrowings

59,249

78,475

53,570

67,599

Other Borrowings

267,610

158,432

257,519

152,042

Total Interest Bearing Liabilities

2,505,863

2,341,944

2,486,243

2,331,621

Stockholders' Equity

390,151

363,802

386,887

360,395

(1) See supplemental information - Non-GAAP financial measures

Lakeland Bancorp, Inc.

Consolidated Statements of Operations

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in thousands, except per share amounts)

2015

2014

2015

2014

INTEREST INCOME

Loans and fees

$28,211

$27,558

$56,107

$54,456

Federal funds sold and interest bearing deposits with banks

11

9

23

22

Taxable investment securities and other

2,688

2,515

5,362

5,061

Tax exempt investment securities

398

467

808

940

TOTAL INTEREST INCOME

31,308

30,549

62,300

60,479

INTEREST EXPENSE

Deposits

1,346

1,243

2,629

2,506

Federal funds purchased and securities sold under agreements to repurchase

37

35

59

50

Other borrowings

1,256

852

2,425

1,659

TOTAL INTEREST EXPENSE

2,639

2,130

5,113

4,215

NET INTEREST INCOME

28,669

28,419

57,187

56,264

Provision for loan and lease losses

740

1,593

1,610

3,082

NET INTEREST INCOME AFTER PROVISION FOR

LOAN AND LEASE LOSSES

27,929

26,826

55,577

53,182

NONINTEREST INCOME

Service charges on deposit accounts

2,450

2,663

4,790

5,222

Commissions and fees

1,196

1,082

2,503

2,095

Gain on investment securities

17

--

17

2

Gain on sale of loans

464

152

729

235

Income on bank owned life insurance

388

365

1,087

725

Other income

443

109

570

165

TOTAL NONINTEREST INCOME

4,958

4,371

9,696

8,444

NONINTEREST EXPENSE

Salaries and employee benefits

12,144

11,200

23,894

22,013

Net occupancy expense

2,273

2,041

4,821

4,658

Furniture and equipment

1,629

1,660

3,285

3,353

Stationery, supplies and postage

377

334

742

688

Marketing expense

416

476

656

862

FDIC insurance expense

531

511

1,049

1,012

Legal expense

325

219

441

492

Other real estate owned and other repossessed assets expense

27

100

19

115

Core deposit intangible amortization

107

119

218

242

Other expenses

3,366

2,870

6,112

5,837

TOTAL NONINTEREST EXPENSE

21,195

19,530

41,237

39,272

INCOME BEFORE PROVISION FOR INCOME TAXES

11,692

11,667

24,036

22,354

Provision for income taxes

3,830

3,886

7,844

7,410

NET INCOME

$7,862

$7,781

$16,192

$14,944

EARNINGS PER COMMON SHARE

Basic

$0.21

$0.20

$0.42

$0.39

Diluted

$0.21

$0.20

$0.42

$0.39

DIVIDENDS PER COMMON SHARE

$0.085

$0.071

$0.160

$0.142

Lakeland Bancorp, Inc.

Consolidated Balance Sheets

June 30,

December 31,

(Dollars in thousands)

2015

2014

(Unaudited)

ASSETS

Cash and due from banks

$118,207

$102,549

Federal funds sold and interest bearing deposits due from banks

19,359

6,767

Total cash and cash equivalents

137,566

109,316

Investment securities available for sale, at fair value

461,686

457,449

Investment securities held to maturity; fair value of $123,585 in 2015 and $109,030 in 2014

123,133

107,976

Federal Home Loan Bank and other membership stocks, at cost

12,779

9,846

Loans held for sale

3,348

592

Loans:

Commercial, secured by real estate

1,695,276

1,593,781

Commercial, industrial and other

262,617

238,252

Leases

53,798

54,749

Residential mortgages

414,339

431,190

Consumer and home equity

330,664

337,642

Total loans

2,756,694

2,655,614

Net deferred costs

(2,177)

(1,788)

Allowance for loan and lease losses

(30,174)

(30,684)

Net loans

2,724,343

2,623,142

Premises and equipment, net

35,524

35,675

Accrued interest receivable

8,911

8,896

Goodwill

109,974

109,974

Other identifiable intangible assets

1,742

1,960

Bank owned life insurance

61,869

57,476

Other assets

18,252

16,023

TOTAL ASSETS

$3,699,127

$3,538,325

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:

Deposits:

Noninterest bearing

$714,227

$646,052

Savings and interest bearing transaction accounts

1,822,295

1,864,805

Time deposits under $100,000

165,105

165,625

Time deposits $100,000 and over

141,326

114,337

Total deposits

2,842,953

2,790,819

Federal funds purchased and securities sold under agreements to repurchase

146,249

108,935

Other borrowings

262,728

202,498

Subordinated debentures

41,238

41,238

Other liabilities

15,099

15,397

TOTAL LIABILITIES

3,308,267

3,158,887

STOCKHOLDERS' EQUITY:

Common stock, no par value; authorized 70,000,000 shares; issued 37,903,282 shares at June 30, 2015 and 37,910,840 shares at December 31, 2014

385,565

384,731

Retained Earnings (Accumulated Deficit)

3,281

(6,816)

Accumulated other comprehensive gain

2,014

1,523

TOTAL STOCKHOLDERS' EQUITY

390,860

379,438

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$3,699,127

$3,538,325

Lakeland Bancorp, Inc.

Financial Highlights

(Unaudited)

For the Quarter Ended

Jun 30,

Mar 31,

Dec 31,

Sept 30,

Jun 30,

(Dollars in thousands, except per share data)

2015

2015

2014

2014

2014

INCOME STATEMENT

Net Interest Income

$ 28,669

$ 28,518

$ 28,850

$ 28,452

$ 28,419

Provision for Loan and Lease Losses

(740)

(870)

(1,589)

(1,194)

(1,593)

Other Noninterest Income

4,494

4,473

4,274

4,666

4,219

Gain on Sale of Loans

464

265

195

143

152

Other Noninterest Expense

(21,195)

(20,042)

(20,178)

(19,685)

(19,530)

Pretax Income

11,692

12,344

11,552

12,382

11,667

Tax Expense

(3,830)

(4,014)

(3,613)

(4,136)

(3,886)

Net Income

$ 7,862

$ 8,330

$ 7,939

$ 8,246

$ 7,781

Basic Earnings Per Common Share

$ 0.21

$ 0.22

$ 0.21

$ 0.22

$ 0.20

Diluted Earnings Per Common Share

$ 0.21

$ 0.22

$ 0.21

$ 0.22

$ 0.20

Dividends Per Common Share

$ 0.085

$ 0.075

$ 0.075

$ 0.075

$ 0.071

Dividends Paid

$ 3,243

$ 2,852

$ 2,853

$ 2,853

$ 2,717

Weighted Average Shares - Basic

37,854

37,800

37,765

37,738

37,740

Weighted Average Shares - Diluted

37,988

37,937

37,920

37,862

37,850

SELECTED OPERATING RATIOS

Annualized Return on Average Assets

0.88%

0.96%

0.90%

0.95%

0.93%

Annualized Return on Average Common Equity

8.08%

8.81%

8.35%

8.83%

8.58%

Annualized Return on Tangible Common Equity (1)

11.33%

12.43%

11.87%

12.66%

12.41%

Annualized Net Interest Margin

3.46%

3.56%

3.58%

3.58%

3.69%

Efficiency Ratio (1)

62.09%

59.17%

59.87%

57.97%

58.73%

Common Stockholders' Equity to Total Assets

10.57%

10.70%

10.72%

10.65%

10.57%

Tangible Common Equity to Tangible Assets (1)

7.78%

7.86%

7.81%

7.69%

7.59%

Tier 1 Risk-Based Ratio (2)

11.05%

11.12%

11.76%

11.75%

11.54%

Total Risk-Based Ratio (2)

12.15%

12.25%

12.98%

12.97%

12.75%

Tier 1 Leverage Ratio (2)

9.12%

9.17%

9.08%

9.02%

9.06%

Common Equity Tier 1 Capital Ratio (2)

9.66%

9.70%

N/A

N/A

N/A

Book Value per Common Share

$ 10.31

$ 10.24

$ 10.01

$ 9.83

$ 9.70

Tangible Book Value per Common Share (1)

$ 7.36

$ 7.29

$ 7.06

$ 6.87

$ 6.74

(1) See Supplemental Information - Non-GAAP financial measures

(2) Beginning March 31, 2015, these ratios were calculated according to the Basel III capital rules that took effect on January 1, 2015.

Lakeland Bancorp, Inc.

Financial Highlights

(Unaudited)

For the Quarter Ended

Jun 30,

Mar 31,

Dec 31,

Sept 30,

Jun 30,

(Dollars in thousands)

2015

2015

2014

2014

2014

SELECTED BALANCE SHEET DATA AT PERIOD-END

Loans and Leases

$ 2,756,694

$ 2,691,705

$ 2,655,614

$ 2,613,404

$ 2,610,198

Allowance for Loan and Lease Losses

(30,174)

(30,505)

(30,684)

(30,047)

(29,866)

Investment Securities

597,598

599,986

575,271

558,032

530,934

Total Assets

3,699,127

3,627,764

3,538,325

3,498,905

3,479,548

Total Deposits

2,842,953

2,842,565

2,790,819

2,776,931

2,726,850

Short-Term Borrowings

146,249

117,351

108,935

112,796

156,511

Other Borrowings

303,966

263,966

243,736

220,938

215,238

Stockholders' Equity

390,860

388,084

379,438

372,539

367,833

Loans and Leases

Commercial Real Estate

$ 1,695,276

$ 1,636,128

$ 1,593,781

$ 1,557,168

$ 1,551,071

Commercial, Industrial and Other

262,617

244,162

238,252

231,961

237,071

Leases

53,798

54,271

54,749

52,285

50,191

Residential Mortgages

414,339

426,339

431,190

431,477

433,634

Consumer and Home Equity

330,664

330,805

337,642

340,513

338,231

Total Loans

$ 2,756,694

$ 2,691,705

$ 2,655,614

$ 2,613,404

$ 2,610,198

Deposits

Noninterest Bearing

$ 714,227

$ 672,264

$ 646,052

$ 674,933

$ 649,186

Savings and Interest Bearing Transaction Accounts

1,822,295

1,878,598

1,864,805

1,820,657

1,797,358

Time Deposits Under $100,000

165,105

164,946

165,625

168,391

169,655

Time Deposits $100,000 and Over

141,326

126,757

114,337

112,950

110,651

Total Deposits

$ 2,842,953

$ 2,842,565

$ 2,790,819

$ 2,776,931

$ 2,726,850

SELECTED AVERAGE BALANCE SHEET DATA

Loans and Leases, net

$ 2,720,801

$ 2,660,512

$ 2,622,602

$ 2,608,687

$ 2,552,010

Investment Securities

600,547

582,912

566,039

529,379

537,974

Interest Earning Assets

3,345,380

3,271,110

3,227,390

3,183,361

3,114,539

Total Assets

3,600,416

3,526,898

3,483,162

3,443,946

3,360,289

Noninterest Bearing Demand Deposits

688,854

660,548

679,796

671,049

640,080

Savings Deposits

402,142

395,153

384,064

382,642

387,179

Interest Bearing Transaction Accounts

1,480,866

1,495,270

1,487,492

1,457,680

1,433,382

Time Deposits

295,996

280,837

277,930

280,200

284,475

Total Deposits

2,867,858

2,831,808

2,829,282

2,791,571

2,745,116

Short-Term Borrowings

59,249

47,827

38,653

49,725

78,475

Other Borrowings

267,610

247,316

221,848

217,049

158,432

Total Interest Bearing Liabilities

2,505,863

2,466,403

2,409,988

2,387,295

2,341,944

Stockholders' Equity

390,151

383,587

377,379

370,448

363,802

Lakeland Bancorp, Inc.

Financial Highlights

(Unaudited)

For the Quarter Ended

Jun 30,

Mar 31,

Dec 31,

Sept 30,

Jun 30,

(Dollars in thousands)

2015

2015

2014

2014

2014

AVERAGE ANNUALIZED YIELDS (Taxable Equivalent Basis)

Assets:

Loans and leases

4.16%

4.25%

4.26%

4.25%

4.33%

Taxable investment securities and other

2.02%

2.08%

2.09%

2.08%

2.18%

Tax-exempt securities

3.58%

3.67%

3.75%

3.79%

3.74%

Federal funds sold and interest bearing cash accounts

0.18%

0.17%

0.26%

0.21%

0.15%

Total interest earning assets

3.78%

3.86%

3.87%

3.87%

3.97%

Liabilities:

Savings accounts

0.05%

0.05%

0.05%

0.05%

0.05%

Interest bearing transaction accounts

0.23%

0.23%

0.23%

0.23%

0.23%

Time deposits

0.59%

0.56%

0.54%

0.49%

0.51%

Borrowings

1.58%

1.61%

1.65%

1.63%

1.50%

Total interest bearing liabilities

0.42%

0.40%

0.39%

0.39%

0.36%

Net interest spread (taxable equivalent basis)

3.36%

3.46%

3.48%

3.48%

3.60%

Annualized net interest margin (taxable equivalent basis)

3.46%

3.56%

3.58%

3.58%

3.69%

Annualized cost of deposits

0.19%

0.18%

0.18%

0.18%

0.18%

ASSET QUALITY DATA

Allowance for Loan and Lease Losses

Balance at beginning of period

$ 30,505

$ 30,684

$ 30,047

$ 29,866

$ 29,520

Provision for loan losses

740

870

1,589

1,194

1,593

Net charge-offs

(1,071)

(1,049)

(952)

(1,013)

(1,247)

Balance at end of period

$ 30,174

$ 30,505

$ 30,684

$ 30,047

$ 29,866

Net Loan Charge-offs (Recoveries)

Commercial real estate

$ 476

$ 426

$ (287)

$ 28

$ (152)

Commercial, industrial and other

21

(31)

99

(71)

511

Leases

102

407

185

229

126

Home equity and consumer

386

231

860

638

411

Real estate - mortgage

86

16

95

189

351

Net charge-offs

$ 1,071

$ 1,049

$ 952

$ 1,013

$ 1,247

Non-performing Assets

Commercial real estate

$ 5,307

$ 6,994

$ 7,612

$ 8,549

$ 9,647

Commercial, industrial and other

1,354

285

308

599

700

Leases

79

111

88

141

61

Home equity and consumer

3,143

3,472

3,415

2,114

2,251

Real estate - mortgage

9,098

9,552

9,246

7,221

6,730

Total non-accruing loans

18,981

20,414

20,669

18,624

19,389

Property acquired through foreclosure or repossession

1,078

826

1,026

982

850

Total non-performing assets

$ 20,059

$ 21,240

$ 21,695

$ 19,606

$ 20,239

Loans past due 90 days or more and still accruing

$ 102

$ 134

$ 66

$ 429

$ 286

Loans restructured and still accruing

$ 12,419

$ 11,538

$ 10,579

$ 7,957

$ 6,818

Ratio of allowance for loan and lease losses to total loans

1.09%

1.13%

1.16%

1.15%

1.14%

Non-performing loans to total loans

0.69%

0.76%

0.78%

0.71%

0.74%

Non-performing assets to total assets

0.54%

0.59%

0.61%

0.56%

0.58%

Annualized net charge-offs to average loans

0.16%

0.16%

0.15%

0.16%

0.20%

Lakeland Bancorp, Inc.

Supplemental Information - Non-GAAP Financial Measures

(Unaudited)

At or for the Quarter Ended

Jun 30,

Mar 31,

Dec 31,

Sept 30,

Jun 30,

(Dollars in thousands, except per share amounts)

2015

2015

2014

2014

2014

Calculation of tangible book value per common share

Total common stockholders' equity at end of period - GAAP

$ 390,860

$ 388,084

$ 379,438

$ 372,539

$ 367,833

Less:

Goodwill

109,974

109,974

109,974

109,974

109,974

Other identifiable intangible assets, net

1,742

1,849

1,960

2,071

2,182

Total tangible common stockholders' equity at end of period - Non-GAAP

$ 279,144

$ 276,261

$ 267,504

$ 260,494

$ 255,677

Shares outstanding at end of period

37,903

37,900

37,911

37,910

37,914

Book value per share - GAAP

$ 10.31

$ 10.24

$ 10.01

$ 9.83

$ 9.70

Tangible book value per share - Non-GAAP

$ 7.36

$ 7.29

$ 7.06

$ 6.87

$ 6.74

Calculation of tangible common equity to tangible assets

Total tangible common stockholders' equity at end of period - Non-GAAP